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Federal Reserve Bank of San Francisco President Mary Daly said on Saturday that despite significant progress in lowering price pressures over the past two years, inflation remains uncomfortably above the 2% target, per Bloomberg.   Key quotes Inflation remains above our target.  Labor market equilibrium maintained, opposes further deceleration. Notes increased tradeoff between inflation and job market. Policy rules serve as a beginning point, setting the tone for discussion.  I would not want to see further slowing in the labor market.  So while we do absolutely have to continue to get inflation down to our 2% target, we have to be resolute about that we have to do it in a thoughtful manner so that we can also support the full employment goal.  Market reaction The US Dollar Index (DXY) is trading 0.11% higher on the day at 109.05, as of writing. Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback. The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of…

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Filed under: News - @ January 6, 2025 1:29 am